ASSAM ELECTRICITY REGULATORY COMMISSION (AERC) TARIFF ORDER TRUE-UP FOR FY 2014-15 & FY 2015-16 AND ARR FOR FY 2016-17 to FY 2018-19 AND TARIFF FOR FY 2017-18 Assam Electricity Grid Corporation Limited (AEGCL) Petition No. 35/2016
Table of Contents 1 INTRODUCTION... 1 1.1 CONSTITUTION OF THE COMMISSION... 1 1.2 TARIFF RELATED FUNCTIONS OF THE COMMISSION... 1 1.3 BACKGROUND... 2 1.4 MULTI YEAR TARIFF REGULATIONS, 2015... 3 1.5 PROCEDURAL HISTORY... 5 1.6 STATE ADVISORY COMMITTEE MEETING... 7 2 SUMMARY OF AEGCL S PETITION... 8 2.1 BACKGROUND... 8 2.2 TRUE-UP FOR FY 2014-15 AND FY 2015-16... 8 2.3 AGGREGATE REVENUE REQUIREMENT FOR MYT CONTROL PERIOD... 9 2.4 PRAYERS OF AEGCL...10 3 BRIEF SUMMARY OF OBJECTIONS RAISED, RESPONSE OF THE AEGCL AND COMMISSION S COMMENTS...12 4 TRUING UP FOR FY 2014-15 AND FY 2015-16...27 4.1 METHODOLOGY FOR TRUING UP...27 4.2 TRANSMISSION LOSS...28 4.3 REVENUE FROM OPERATIONS...28 4.4 NON-TARIFF INCOME...28 4.5 PGCIL CHARGES...29 4.6 O&M EXPENSES...29 4.7 DEPRECIATION...31 4.8 INTEREST AND FINANCE CHARGES...33 4.9 INTEREST ON WORKING CAPITAL (IOWC)...35 4.10 OTHER DEBITS...36 4.11 BST FOR PENSION FUND (SPECIAL CHARGES FOR TERMINAL BENEFITS)...37 4.12 NET PRIOR PERIOD EXPENSES/(INCOME)...37 4.13 RETURN ON EQUITY...39 4.14 INCOME TAX...39 AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page i
4.15 ARR AFTER TRUING UP OF FY 2014-15 AND FY 2015-16...39 5 ARR FOR MYT CONTROL PERIOD FROM FY 2016-17 TO FY 2018-19...42 5.1 INTRODUCTION...42 5.2 TRANSMISSION LOSS...42 5.3 TRANSMISSION AVAILABILITY...42 5.4 ANNUAL TRANSMISSION CHARGES FOR MYT CONTROL PERIOD...43 5.5 OPERATION AND MAINTENANCE EXPENSES...44 5.6 CAPITAL EXPENDITURE AND CAPITALISATION...51 5.7 DEPRECIATION...55 5.8 INTEREST ON LOAN CAPITAL...58 5.9 RETURN ON EQUITY...60 5.10 INTEREST ON WORKING CAPITAL...61 5.11 PGCIL CHARGES...62 5.12 PROVISION OF INCOME TAX...63 5.13 OTHER DEBITS...63 5.14 BST FOR PENSION FUND...63 5.15 NON-TARIFF INCOME...64 5.16 SUMMARY OF ARR FOR CONTROL PERIOD FROM FY 2016-17 TO FY 2018-19...64 6 TRANSMISSION TARIFF FOR FY 2017-18...66 6.1 CUMULATIVE REVENUE GAP/(SURPLUS) AND NET ARR FOR RECOVERY...66 6.2 TRANSMISSION TARIFF FOR FY 2017-18...68 6.3 ANNUAL SLDC CHARGES FOR FY 2017-18...71 6.4 APPLICABILITY OF TARIFF...72 7 DIRECTIVES...73 8 ANNEXURES...75 8.1 ANNEXURE 1 - MINUTES OF THE 21 ST MEETING OF THE STATE ADVISORY COMMITTEE...75 AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page ii
List of Tables Table 1: True-up ARR for FY 2014-15 and 2015-16 as submitted by AEGCL (Rs. Crore)... 8 Table 2: ARR for FY 2016-17 to 2018-19 as submitted by AEGCL... 9 Table 3: ARR of State Load Despatch Centre (SLDC) for FY 2016-17 to FY 2018-19 as submitted by AEGCL (Rs. Crore)...10 Table 4: Transmission Loss as submitted by AEGCL...28 Table 5: Depreciation approved for FY 2014-15 (Rs. Crore)...32 Table 6: Depreciation approved for FY 2015-16 (Rs. Crore)...33 Table 7: Approved Interest and Finance Charges for FY 2014-15 (Rs. Crore)...34 Table 8: Approved Interest and Finance Charges for FY 2015-16 (Rs. Crore)...35 Table 9: Interest and Finance Charges for FY 2014-15 and FY 2015-16 (Rs. Crore)...35 Table 10: Approved Interest on Working Capital for FY 2014-15 and FY 2015-16 (Rs. Crore)...36 Table 11: Net Prior Period expenses/(income) approved for FY 2014-15 (Rs. Crore)...38 Table 12: Net Prior Period expenses/(income) approved for FY 2015-16 (Rs. Crore)...38 Table 13: ARR approved after Truing up for FY 2014-15 (Rs. Crore)...39 Table 14: ARR approved in the Truing up for FY 2015-16 (Rs. Crore.)...40 Table 15: Transmission Loss as submitted by AEGCL for FY 2016-17 to FY 2018-19...42 Table 16: Employee Expenses projected by AEGCL (Rs. Crore)...45 Table 17: R&M expenses projected by AEGCL (Rs. Crore)...45 Table 18: A&G expenses projected by AEGCL (Rs. Crore)...46 Table 19: Approved Employee Expenses for Control Period (Rs. Crore)...49 Table 20: Computation of K-factor for Control Period (Rs. Crore)...49 Table 21: Approved R&M Expenses for Control Period (Rs. Crore)...50 Table 22: Approved A&G Expenses for Control Period (Rs. Crore)...51 Table 23: Capital Expenditure and Capitalisation submitted by AEGCL (Rs. Crore)...51 Table 24: Capital Expenditure approved for AEGCL in past Orders (Rs. Crore)...53 AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page iii
Table 25: Capital Expenditure and capitalisation approved by the Commission (Rs. Crore).54 Table 26: Funding of capitalised works approved by the Commission (Rs. Crore)...55 Table 27: Depreciation approved for FY 2016-17 (Rs. Crore)...56 Table 28: Depreciation approved for FY 2017-18 (Rs. Crore)...57 Table 29: Depreciation approved for FY 2018-19 (Rs. Crore)...57 Table 30: Projected Interest and Finance charges (Rs. Crore)...58 Table 31: Computation of Normative loan outstanding as on April 1, 2016 (Rs. Crore)...59 Table 32: Approved Interest on Loan Capital (Rs. Crore)...60 Table 33: Return on Equity as submitted by AEGCL (Rs. Crore)...60 Table 34: Return on Equity approved by the Commission (Rs. Crore)...61 Table 35: Interest on Working Capital as submitted by AEGCL (Rs. Crore)...61 Table 36: Interest on Working Capital as approved by the Commission (Rs. Crore)...62 Table 37: PGCIL Charges as submitted by AEGCL (Rs. Crore)...62 Table 38: PGCIL Charges as approved by the Commission (Rs. Crore)...63 Table 39: BST for Pension Fund as submitted by AEGCL (Rs. Crore)...63 Table 40: BST for Pension Fund as approved by the Commission (Rs. Crore)...64 Table 41: Non-Tariff income as submitted by AEGCL (Rs. Crore)...64 Table 42: ARR for Control Period from FY 2016-17 to FY 2018-19 as approved by the Commission (Rs. Crore)...65 Table 43: Net ARR for recovery as submitted by AEGCL (Rs. Crore)...66 Table 44: Cumulative Revenue (Gap)/Surplus approved till end of FY 2016-17 (Rs. Crore).66 Table 45: Revenue (Gap)/Surplus for FY 2016-17 as approved by the Commission (Rs. Crore)...67 Table 46: Net ARR for recovery as approved by the Commission (Rs. Crore)...68 Table 47: Proposed Transmission tariff as submitted by AEGCL (Rs. Crore)...68 AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page iv
List of Abbreviations A&G ABITA ADB AEGCL AERC APDCL APGCL APTEL ARR AS ASEB BST CAG/C&AG CEA CERC CPC CPI CSGS CTU CWIP DA DISCOM EAP EPFI FAR FCC FINER FIRR GFA GoA GPF H1 Administration and General Assam Branch of Indian Tea Association Asian Development Bank Assam Electricity Grid Corporation Limited Assam Electricity Regulatory Commission Assam Power Distribution Company Limited Assam Power Generation Corporation Limited Appellate Tribunal for Electricity Aggregate Revenue Requirement Accounting Standards Assam State Electricity Board Bulk Supply Tariff Comptroller and Auditor General Central Electricity Authority Central Electricity Regulatory Commission Central Pay Commission Consumer Price Index Central Sector Generating Stations Central Transmission Utility Capital Work-In-Progress Dearness Allowance Distribution Company Externally Aided Projects Employees Pension Fund Investment Fixed Asset Register Financial Completion Certificate Federation of Industry & Commerce of North Eastern Region Financial Internal Rate of Return Gross Fixed Assets Government of Assam General Provident Fund First Half of the year AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page v
H2 HRA IWC/IoWC kw kwh LTA MCA MU MW MYT NERLDC NTPC O&M PCC PGCIL PoC R&M RoE ROI RLDC ROP SAC SBI SLDC SLM STOA STU TSC TVS UPPCL WPI Second Half of the year House Rent Allowance Interest on Working Capital kilo Watt kilo Watt Hour Leave Travel Allowance Ministry of Corporate Affairs Million Units Mega Watt Multi Year Tariff North Eastern Region Load Despatch Centre NTPC Ltd. Operation and Maintenance Physical Completion Certificate Power Grid Corporation of India Limited Point of Connection Repairs and Maintenance Return on Equity Rate of Interest Regional Load Despatch Centre Revision of Pay State Advisory Committee State Bank of India State Load Despatch Centre Straight Line Method Short Term Open Access State Transmission Utility Transmission Service Charges Technical Validation Session Uttar Pradesh Power Corporation Ltd. Wholesale Price Index AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page vi
ASSAM ELECTRICITY REGULATORY COMMISSION Guwahati Present Shri Naba Kumar Das, Chairperson Shri Dipak Chakravarty, Member Shri Subhash C. Das, Member Petition No. 35/2016 Assam Electricity Grid Corporation Limited (AEGCL) - Petitioner ORDER (Passed on March 31, 2017) (1) The Commission vide its order dated November 21, 2013, approved the Multi Year Tariff applicable for the Assam Electricity Grid Corporation Limited (hereinafter referred to as AEGCL ), for the period from FY 2013-14 to FY 2015-16. Subsequently, the Commission has issued the Tariff Order for FY 2014-15 on November 21, 2014, and for FY 2015-16 on July 24, 2015 in accordance with the provisions of the Assam Electricity Regulatory Commission (Terms and Conditions for determination of Tariff) Regulations, 2006 (herein after referred as Tariff Regulations, 2006 ) (2) The Commission, in exercise of the powers conferred under Section 61 read with Section 181(2) (zd) of the Act, has notified the Assam Electricity Regulatory Commission (Terms and Conditions for determination of Multi Year Tariff) Regulations, 2015 (hereinafter referred as MYT Regulations, 2015 ) on June 2, 2015. These Regulations are applicable for determination of Tariff for Generation, Transmission, SLDC, Wheeling and Retail Supply for the Control Period of three financial years from April 1, 2016 onwards up to March 31, 2019. These Regulations are applicable to all existing and future Generating AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page vii
Companies, Transmission Licensees and Distribution Licensees within the State of Assam. (3) Regulation 6 of the MYT Regulations, 2015 requires the Generating Company, Transmission Licensee, SLDC Business and Distribution Licensee to file the Business Plan for the entire Control Period by 1 st July of the year preceding the first year of the Control Period, i.e., before the filing of Multi Year Tariff (MYT) Petition. (4) However, considering that AEGCL was preparing and filing the Business Plan for the first time, the Commission vide letter dated August 29, 2015 directed AEGCL to file Business Plan Petition by November 1, 2015. (5) Thereafter, AEGCL filed petition for condonation of delay and requested for extension of time for filing of Business Plan till December 31, 2015 in view of 24x7 Power for All document finalized for State of Assam on October 9, 2015. The Commission granted extension of time till November 30, 2015 and directed AEGCL to submit the Business Plan for the three-year Control Period from FY 2016-17 to FY 2018-19 on or before November 30, 2015. (6) AEGCL filed the Business Plan Petition for the Control Period from FY 2016-17 to FY 2018-19 on December 12, 2015 along with a Petition for condonation of delay. The Commission deemed it fit to consider SLDC embedded in AEGCL Business Plan for this Control Period. However, the Commission directed AEGCL to complete the process of segregation of accounts of SLDC from AEGCL and to file separate Business Plan Petition for SLDC for the next Control Period. (7) The Commission carried out preliminary analysis of the Business Plan Petition and observed that the Business Plan Petition was not as per requirement of MYT Regulations, 2015. Thereafter, AEGCL was directed to submit the revised Business Plan incorporating all the observations and clarifications sought by the Commission from AEGCL by February 12, 2016 and the same was submitted on March 7, 2016. Further, the Commission conducted the Technical Validation Session on the Business Plan Petition on April 26, 2016. The Commission directed AEGCL to submit the Supplementary Petition, duly approved by the Board of Directors, giving the realistic Business Plan after incorporating all revisions in technical and financial parameters. AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page viii
(8) Based on the discussions held during the Technical Validation Session and after incorporating the additional information/clarifications, AEGCL filed the revised Business Plan Petition on May 18, 2016. AEGCL also submitted the copy of Board Resolution approving the revised Business Plan duly certified by the Company Secretary, during the hearing on July 26, 2016. This process delayed the issuance of the Business Plan Order. (9) Accordingly, the Commission issued the Order on the said Business Plan on September 1, 2016 and directed AEGCL to file the MYT Petition, including the forecast of Aggregate Revenue Requirement for FY 2016-17 to FY 2018-19, true-up for FY 2014-15 and FY 2015-16, actuals of FY 2016-17 (6 months), and projected tariff for FY 2016-17 and FY 2017-18. (10) AEGCL has filed Petition for Truing up for FY 2014-15 and FY 2015-16 as per Tariff Regulations, 2006 and approval of ARR for the Control Period from FY 2016-17 to FY 2018-19 and determination of Tariff for FY 2017-18 as per MYT Regulations, 2015 (Petition No.35/2016) on October 31, 2016. (11) The Commission conducted preliminary analysis of the Petition submitted by AEGCL and found that the Petition was incomplete in material particulars. Therefore, additional data and clarifications on the MYT Petition were sought from AEGCL vide letter dated December 1, 2016 and these were submitted by them on December 17, 2016. (12) The Commission held an Admissibility Hearing on December 17, 2016, and admitted the Petition (Petition No. 35/2016) vide Order dated December 17, 2016. On admission of the Petition, in accordance with Section 64 of the Electricity Act 2003, the Commission directed AEGCL to publish a summary of the ARR and Tariff filings in local dailies to ensure due public participation. A copy of the Petitions and other relevant documents were also made available to the consumers and other interested Parties at the office of the Managing Director of AEGCL and at the offices of the Deputy General Manager of each circle of AEGCL. A copy of the Petition was also made available on the websites of the Commission and AEGCL. (13) Accordingly, a Public Notice was issued by the AEGCL inviting objections/suggestions from objectors to be submitted on or before January 30, 2017. The notice was published in six (6) leading newspapers of the State on January 7, 2017. AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page ix
(14) Meanwhile the Commission received requests for extending the time limit for filing objections/suggestions from some consumers/consumer organizations. The Commission positively considered the requests from different stakeholders, and extended the time limit for filing objections/suggestions up to February 7, 2017. (15) The Commission received suggestions/objections from four (4) stakeholders on the Petitions filed by AEGCL. The objectors were notified about the place, date and time of Hearing, to enable them to take part in the Hearing to be held at District Library Auditorium, Guwahati on February 28, 2017. The Hearing was held as scheduled. The details are discussed in the relevant Chapters of this Tariff Order. (16) The Petition was also discussed in the meeting of the State Advisory Committee (SAC) (constituted under Section 87 of the Electricity Act, 2003) held on March 4, 2017 at Assam Administrative Staff College, Khanapara, Guwahati. (17) The Commission, now in exercise of its powers vested under Sections 61, 62 and 86 of the Electricity Act, 2003 and all other powers enabling it in this behalf and taking into consideration the submissions made by the Petitioner, objections and suggestions received from objectors and all other relevant materials on record, has carried out the True-up for FY 2014-15 and FY 2015-16, approval of ARR for the Control Period from FY 2016-17 to FY 2018-19, and determination of transmission tariff for FY 2017-18 as detailed in subsequent pages. (18) The Commission further directs AEGCL to publish a Public Notice intimating the revised Transmission Charges before the implementation of this Order in English and Vernacular newspapers and on the website of AEGCL. (19) The approved rate of Transmission Charges shall be effective from April 10, 2017 and shall continue until replaced by another Order by the Commission. (20) Accordingly, the Petition No. 35/2016 stands disposed of. Sd/- (S. C. Das) Member, AERC Sd/- (D. Chakravarty) Member, AERC Sd/- (N. K. Das) Chairperson, AERC AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page x
1 INTRODUCTION 1.1 Constitution of the Commission 1.1.1 The Assam Electricity Regulatory Commission (hereinafter referred to as the AERC or the Commission) was established under the Electricity Regulatory Commissions Act, 1998 (14 of 1998) on February 28, 2001. The first proviso of Section 82(1) of the Electricity Act, 2003 (hereinafter referred as the Act or the EA, 2003) has ensured continuity of the Commission under the Electricity Act, 2003. 1.1.2 The Commission is mandated to exercise the powers and functions conferred under Section 181 of the Electricity Act, 2003 (36 of 2003) and to exercise the functions conferred on it under Section 86 of the Act from June 10, 2003. 1.2 Tariff related Functions of the Commission 1.2.1 Under Section 86 of the Act, the Commission has the following tariff related functions: a) To determine the tariff for electricity, wholesale, bulk or retail, as the case may be; b) To regulate power purchase and procurement process of the distribution utilities including the price at which the power shall be procured from the generating companies, generating stations or from other sources for transmission, sale, distribution and supply in the State; c) To promote competition, efficiency and economy in the activities of the electricity industry to achieve the objects and purposes of this Act. 1.2.2 Under Section 61 of the Act in the determination of tariffs, the Commission is to be guided by the following: a) The principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; b) That the electricity generation, transmission, distribution and supply are conducted on commercial principles; c) That factors which would encourage efficiency, economical use of the resources, good performance, optimum investments, and other matters which the State commission considers appropriate for the purpose of this Act; AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 1
d) The interests of the consumers are safeguarded and at the same time, the consumers pay for the use of electricity in a reasonable manner based on their customer category cost of supply; e) That the tariff progressively reflects the cost of supply of electricity at an adequate and improving level of efficiency and also gradually reduces cross subsidies; f) The National Power Plans formulated by the Central Government including the National Electricity Policy and Tariff Policy. 1.3 Background 1.3.1 The Government of Assam notified Vide Memo No. PEL151/2003/Pt./165 dated December 10, 2004, the restructuring of the erstwhile Assam State Electricity Board (ASEB) into five entities, namely; (i) Assam Electricity Grid Corporation Limited (AEGCL) to carry out function as State Transmission Utility (STU) (ii) Assam Power Generation Corporation Limited (APGCL) to carry out function of generation of electricity in the State of Assam (iii) Three Electricity Distribution Companies, namely, Lower, Central and Upper Assam Distribution Company Limited, respectively, to carry out functions of distribution and retail supply of electricity in the districts covered under each company area. 1.3.2 AEGCL owns and operates the transmission system previously owned by Assam State Electricity Board (ASEB). AEGCL has started functioning as a separate entity from December 10, 2004. The Government of Assam vide Notification No. PEL.151/2003/Pt/3/349 dated August 16, 2005 issued order to give effect to the reorganization of the ASEB and finalization of the provisional Transfer effected as per the provisions of the Act and the First Transfer Scheme. The Government of Assam notified the opening Balance Sheet updated and finalized based on the Audited Accounts of ASEB as on March 31, 2005 under Notification No. PEL/114/2006/120 dated August 29, 2007. 1.3.3 The Commission notified the AERC (Terms and Conditions for Determination of Tariff) Regulations, 2006 (hereafter referred as Tariff Regulations, 2006) vide Notification No. AERC. 2005/19 dated April 28, 2006, which was published in the Assam Gazette on May 24, 2006. As per Regulation 1.2 of the Tariff Regulations, 2006, the Regulations AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 2
shall apply to all the intra-state transmission licensees operating in the State of Assam. The State Government vide notification No. PEL.133/2003/Pt 467 dated March 18, 2009 allowed the Assam State Electricity Board (ASEB) to continue to undertake the limited functions of bulk purchase and bulk supply up to June 15, 2009 in respect to the existing generating capacity and existing contracted capacity for the said period. 1.3.4 The Government of Assam vide Notification dated March 12, 2013 dissolved ASEB under Section 131 of the Act with effect from March 31, 2013 and transferred ASEB s current functions and reassigned its personnel to its successor entities namely APDCL, AEGCL and APGCL in accordance with the Scheme of Reorganization. 1.3.5 As per Regulation 5.3 of the Tariff Regulations, 2006, based on Multi Year Tariff (MYT) principles, the tariff is to be determined on the basis of the principles enunciated for a period of three years commencing from April 1, 2006 for the transmission business. 1.3.6 AEGCL had filed the MYT Petition for the Control Period from FY 2013-14 to FY 2015-16 on April 11, 2013. The Commission, after following the due regulatory process, issued the Tariff Order on November 21, 2013. 1.3.7 Subsequently, the Commission has issued the Tariff Order for FY 2014-15 on November 21, 2014, and for FY 2015-16 on July 24, 2015 in accordance with the provisions of the Tariff Regulations, 2006. 1.4 Multi Year Tariff Regulations, 2015 1.4.1 The Commission, in exercise of the powers conferred under Section 61 read with Section 181(2) (zd) of the Act, has notified the Assam Electricity Regulatory Commission (Terms and Conditions for determination of Multi Year Tariff) Regulations, 2015 (hereinafter referred as MYT Regulations, 2015 ) on June 2, 2015. These Regulations are applicable for determination of Tariff for Generation, Transmission, SLDC, Wheeling and Retail Supply for the Control Period of three financial years from April 1, 2016 onwards up to March 31, 2019. These Regulations are applicable to all existing and future Generating Companies, Transmission Licensees and Distribution Licensees within the State of Assam. 1.4.2 Regulation 6 of the MYT Regulations, 2015 requires the Generating Company, Transmission Licensee, SLDC Business and Distribution Licensee to file the Business Plan for the entire Control Period by 1 st July of the year preceding the first year of the AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 3
Control Period, i.e., before the filing of Multi Year Tariff (MYT) Petition. 1.4.3 However, considering that AEGCL was preparing and filing the Business Plan for the first time, the Commission vide letter dated August 29, 2015 directed AEGCL to file Business Plan Petition by November 1, 2015. 1.4.4 Thereafter, AEGCL filed Petition for condonation of delay and requested for extension of time for filing of Business Plan till December 31, 2015 in view of 24x7 Power for All document finalized for State of Assam on October 9, 2015. The Commission granted extension of time till November 30, 2015 and directed AEGCL to submit the Business Plan for the three-year Control Period from FY 2016-17 to FY 2018-19 on or before November 30, 2015. 1.4.5 AEGCL filed the Business Plan Petition for the Control Period from FY 2016-17 to FY 2018-19 on December 12, 2015 along with a Petition for condonation of delay. The Commission deemed it fit to consider SLDC embedded in AEGCL Business Plan for this Control Period. However, the Commission directed AEGCL to complete the process of segregation of accounts of SLDC from AEGCL and to file separate Business Plan Petition for SLDC for the next Control Period. 1.4.6 The Commission carried out preliminary analysis of the Business Plan Petition and observed that the Business Plan Petition was not as per requirement of MYT Regulations, 2015. Thereafter, AEGCL was directed to submit the revised Business Plan incorporating all the observations and clarifications sought by the Commission from AEGCL by February 12, 2016 and the same was submitted on March 7, 2016. Further, the Commission conducted the Technical Validation Session (TVS) on the Business Plan Petition on April 26, 2016. The Commission directed AEGCL to submit the Supplementary Petition, duly approved by the Board of Directors, giving the realistic Business Plan after incorporating all revisions in technical and financial parameters. 1.4.7 Based on the discussions held during the TVS and after incorporating the additional information/clarifications, AEGCL filed the revised Business Plan Petition on May 18, 2016. Further, AEGCL submitted the copy of Board Resolution approving the revised Business Plan duly certified by the Company Secretary during the hearing on July 26, 2016. This process delayed the issuance of the Business Plan Order. 1.4.8 Accordingly, the Commission issued the Order on the said Business Plan on September 1, 2016 and directed AEGCL to file the MYT Petition, including the forecast AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 4
of Aggregate Revenue Requirement for FY 2016-17 to FY 2018-19, true-up for FY 2014-15 and FY 2015-16, actuals of FY 2016-17 (6 months), and projected tariff for FY 2016-17 and FY 2017-18. 1.4.9 Accordingly, AEGCL has filed the present Petition for approval of Aggregate Revenue Requirement for the Control Period from FY 2016-17 to FY 2018-19 and tariff for FY 2017-18 as per MYT Regulations, 2015, along with True-up for FY 2014-15 and FY 2015-16 as per Tariff Regulations, 2006. 1.5 Procedural History 1.5.1 As per directives of the Commission vide Order dated September 1, 2016, AEGCL has filed the Petition for Truing up for FY 2014-15 and FY 2015-16 as per Tariff Regulations, 2006 and for approval of ARR for the Control Period from FY 2016-17 to FY 2018-19 and determination of Tariff for FY 2017-18 as per MYT Regulations, 2015 (Petition No.35/2016) on October 31, 2016. 1.5.2 The Commission conducted preliminary analysis of the Petition submitted by AEGCL and found that the Petition was incomplete in material particulars. Therefore, additional data and clarifications on the MYT Petition were sought from AEGCL vide letter dated December 1, 2016 and these were submitted by them on December 17, 2016. 1.5.3 The Commission held an Admissibility Hearing on December 17, 2016, and admitted the Petition (Petition No. 35/2016) vide Order dated December 17, 2016. On admission of the Petition, in accordance with Section 64 of the Act, the Commission directed AEGCL to publish its application in the abridged form and manner to ensure due public participation. 1.5.4 The copies of the Petition and other relevant documents were made available to consumers and other interested parties at the office of the Managing Director of AEGCL, and offices of the Deputy General Manager of each circle of AEGCL. AEGCL was also directed to make the copy of the Petition available on its website. A copy of the Petition was made available on the website of AEGCL (www.aegcl.co.in) and also on the website of the Commission (www.aerc.nicgov.in) in downloadable format. A Public Notice was issued by AEGCL inviting objections/suggestions from stakeholders on or before January 30, 2017, which was published in the following newspapers on January 7, 2017: AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 5
Date Name of Newspaper Language 07.01.2017 The Sentinel English 07.01.2017 The Assam Tribune English 07.01.2017 Asamiya Pratidin Assamese 07.01.2017 Dainik Janambhumi Assamese 07.01.2017 Purbanchal Prahari Hindi 07.01.2017 Dainik Jugasankha Bengali 1.5.5 The time limit for submitting objections/suggestions was stipulated in accordance with the AERC (Conduct of Business) Regulations, 2004. Meanwhile the Commission received requests for extending the time limit for filing objections/suggestions from some consumers/consumer organizations. The Commission positively considered the requests from different stakeholders, and extended the time limit for filing objections/suggestions up to February 7, 2017. 1.5.6 While examining the revised submission, the Commission observed additional data requirements vis-à-vis replies to original data requirement, which were sought from AEGCL vide letter dated January 24, 2017. TVS with AEGCL to discuss and sort out data gaps and shortcomings was conducted in the office of the Commission on January 27, 2017. 1.1.1 The Commission considered the objections received and sent communication to the objectors to take part in Hearing process by presenting their views in person before the Commission. Accordingly, the Commission scheduled a Hearing in the matter on February 28, 2017 at District Library Auditorium, Guwahati. In this context, Notices were dispatched to the objectors personally/by Registered Post stating the date and time of Hearing. Also, a comprehensive Notice was published in Six (6) newspapers on February 8, 2017 in Assamese and English language. The Hearing was held at District Library Auditorium, Guwahati on February 28, 2017 as scheduled. All objectors/respondents who participated in the Hearing were given opportunity to express their views on the Petition. 1.5.7 All the written representations submitted to the Commission and oral submissions made before the Commission in the Hearing and the responses of AEGCL have been carefully considered while issuing this Tariff Order. The major issues raised by different AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 6
consumers and consumer groups along with the response of AEGCL, and views of the Commission are elaborated in Chapter 3 of this Order. 1.6 State Advisory Committee Meeting 1.6.1 A meeting of the State Advisory Committee (SAC) (constituted under Section 87 of the Act) was convened on March 4, 2017 and members were briefed on the MYT Petition of AEGCL. The Minutes of the SAC Meeting are appended to this Order as Annexure 1. AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 7
2 Summary of AEGCL s Petition 2.1 Background 2.1.1 AEGCL submitted the Petition on October 31, 2016 seeking approval for Aggregate Revenue Requirement and determination of Transmission Charges for the Control Period from FY 2016-17 to 2018-19 along with True up for FY 2014-15 and FY 2015-16. The Transmission Charges are to be recovered from the Assam Power Distribution Company Limited (APDCL), IPPs and other generators, traders and others who utilize the transmission system. 2.2 True-up for FY 2014-15 and FY 2015-16 2.2.1 AEGCL submitted True-up for FY 2014-15 and FY 2015-16 based on the audited accounts. The summary of Aggregate Revenue Requirement (ARR) and Revenue Gap/(Surplus) claimed by AEGCL for FY 2014-15 and FY 2015-16 is shown in the following Table: Table 1: True-up ARR for FY 2014-15 and 2015-16 as submitted by AEGCL (Rs. Crore) Sr. No. Particulars FY 2014-15 FY 2015-16 1 PGCIL Charges 268.42 441.43 2 Operation and Maintenance Expenses 145.29 149.16 2.1 Employee Cost 128.62 130.34 2.2 Repair and Maintenance 11.53 11.53 2.3 Administrative and General Expenses 5.14 7.29 4 Depreciation 43.31 48.05 5 Interest and Finance Charges 30.90 38.97 6 Interest on Working Capital 17.29 23.46 7 Other Debits 1.26 0.19 8 SLDC Charges 2.54 1.68 9 BST for Pension Trust Fund 139.10 151.42 10 Net Prior Period Expenses (20.04) 3.98 11 Sub Total 628.07 858.34 12 Return on Equity 13.99 13.99 13 Total Expenditure 642.06 872.33 14 Less: Non-Tariff Income 93.24 85.99 AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 8
Sr. No. Particulars FY 2014-15 FY 2015-16 15 Aggregate Revenue Requirement 548.82 786.34 16 Add: True-up for FY 2013-14 - - 17 Net Aggregate Revenue Requirement 548.82 786.34 18 Revenue with Approved Tariff 462.52 537.92 19 Revenue Gap/(Surplus) 86.30 248.42 2.3 Aggregate Revenue Requirement for MYT Control Period 2.3.1 AEGCL has projected the ARR of Rs. 1047.12 Crore for FY 2016-17, Rs. 1585.27 Crore for FY 2017-18 and Rs. 1588.40 Crore for FY 2018-19 as detailed in the Table below: Sr. No. Table 2: ARR for FY 2016-17 to 2018-19 as submitted by AEGCL Particulars FY 2016-17 FY 2017-18 FY 2018-19 1 PGCIL Charges 564.57 666.24 846.12 2 O&M Expenses 195.50 214.97 239.24 2.1 Employee Cost 175.13 192.64 215.76 2.2 Repair & Maintenance 11.52 12.10 12.70 2.3 Administrative & General Expenses 8.85 10.23 10.78 3 BST for Pension Trust Fund 181.14 219.96 261.32 4 Depreciation 88.36 106.77 142.99 5 Interest and Finance Charges 54.55 58.98 61.95 6 Interest on Working Capital 28.18 40.24 41.03 7 Other Debits 0.19 0.19 0.19 8 Return on Equity 22.97 34.44 85.12 9 Less: Non-Tariff Income 75.24 73.04 71.20 10 Less: Expenses Capitalised 15.78 18.21 18.36 11 Add: Interest Expenses on State Government Loan approved by 2.69 - - Commission 12 Add: Revenue Gap for FY 2014-15 and FY 2015-16 - 334.72-13 Total 1047.12 1585.27 1588.40 14 Per Unit Charges for PGCIL (Rs.) 0.64 0.84 0.67 AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 9
Sr. No. Particulars FY 2016-17 FY 2017-18 FY 2018-19 15 Per Unit Charges of AEGCL excluding PGCIL Charges (Rs.) 0.52 0.60 0.55 18 Total Per Unit Charges (Rs.) 1.16 1.44 1.22 2.3.2 AEGCL has also submitted the SLDC Charges for the Control Period, which mainly comprises Employee Cost, R&M Expenses and A&G Expenses as shown in the following Table: Table 3: ARR of State Load Despatch Centre (SLDC) for FY 2016-17 to FY 2018-19 as submitted by AEGCL (Rs. Crore) Particulars FY 2016-17 FY 2017-18 FY 2018-19 Employee Cost 2.11 2.33 2.60 Repair and Maintenance Expenses 0.02 0.02 0.02 Administrative and General Expenses 0.24 0.25 0.26 Total SLDC Charges 2.37 2.60 2.88 2.4 Prayers of AEGCL 2.4.1 AEGCL, in its Petition, has prayed as under: a) In order to align the thoughts and principles behind the Tariff Order and the ARR, AEGCL respectfully seeks an opportunity to present their case prior to the finalization of the Tariff Order. AEGCL believes that such an approach would go a long way towards providing a fair treatment to all the stakeholders and may eliminate the need for a review or clarification. b) AEGCL may also be permitted to propose suitable changes to the ARR and the mechanism of meeting the revenue on further analysis, prior to the final approval by the Hon ble Commission. In view of the above, the petitioner respectfully prays that Hon ble Commission may: (i) Accept the Annual Revenue Requirements and Tariff proposal for Transmission Business respectively in accordance with: a. The guidelines outlined in AERC Orders passed in various matters relating to AEGCL; and AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 10
b. The principles contained in AERC (Terms and Conditions for determination of Tariff) Regulations 2015; (ii) (iii) Condone any inadvertent omissions/errors/rounding off differences/ shortcomings and permit AEGCL to add/ change/ modify/ alter this filing and make further submissions as may be required at a future date. Pass such further and other Orders, as the Commission may deem fit and proper, keeping in view the facts and circumstances of the case. AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 11
3 Brief Summary of Objections Raised, Response of the AEGCL and Commission s Comments 3.1.1 The Commission has received suggestions/objections from four (4) stakeholders on the Petition filed by AEGCL, from the following objectors: Sr. No. Name of Objector 1 Assam Bidyut Grahak Adhikar Parishad 2 Shri Anuj Kumar Baruah 3 Assam Branch of Indian Tea Association (ABITA), Guwahati 4 Federation of Industry & Commerce of North Eastern Region (FINER) 3.1.2 AEGCL has submitted its responses to the objections/ suggestions received from the above objectors. 3.1.3 The Commission considered the objections/suggestions received and notified the objectors to take part in the Hearing process by presenting their views in person before the Commission, if they so desired. 3.1.4 The Commission held the Hearing at District Library Auditorium, Guwahati on February 28, 2017. 3.1.5 The objector/s attended the Hearings and submitted their views/suggestions. All the written representations submitted to the Commission and the oral submissions made before the Commission in the Hearing and the responses of AEGCL have been carefully considered while issuing this Tariff Order. 3.1.6 The objections/suggestions made by the objectors and responses of the Petitioner are briefly dealt with in this Chapter. The major issues raised by the objectors are discussed below along with the response of the Petitioner (AEGCL) and views of the Commission. 3.1.7 While all the objections/suggestions have been given due consideration by the Commission, only, major responses/objections received related to the ARR and Tariff Petition and also those raised during the course of Hearings have been grouped and AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 12
addressed issue-wise, in order to avoid repetition. Issue 1: PGCIL Charges Objection FINER submitted that AEGCL has projected huge increase in PGCIL charges in the true-up proceedings without any justification. AEGCL has claimed increase of Rs. 52 Crore for FY 2014-15 and Rs. 186 Crore for FY 2015-16 on this account. FINER added that AEGCL has escalated PGCIL charges at 18% and 27% for the Control Period over the estimated charges for FY 2015-16 without giving any rationale. FINER submitted that PGCIL Charges are fixed by the CERC and the details of Tariff Orders passed by CERC have also not been given. FINER added that such huge amounts of PGCIL charges cannot be passed on without proper justification and details. ABITA submitted that AEGCL has assumed an escalation rate of 18% and 27% to project the PGCIL Charges for FY 2017-18 and FY 2018-19 in line with the projection of average energy peak load. The Year-on-Year increase of more than 20% in PGCIL charges is highly doubtful in view of the increased availability of power primarily from replacement plant of NTPS and LTPS. ABITA requested the Commission to approve PGCIL Charges considering a moderate escalation of 10% on the actual PGCIL charges of FY 2015-16. Response of AEGCL AEGCL submitted that PGCIL raises bills to AEGCL as per CERC guidelines. The truing up petitions are made as per the statutory as well as C&AG audited Annual Accounts. Moreover, all the actual bills for FY 2014-15 and FY 2015-16 and 10 months of FY 2016-17 raised by PGCIL have been submitted to the Commission. AEGCL added that after the implementation of Point of Connection (POC) regime, the PGCIL Charges have increased from the month of May, 2015. Accordingly, the actual expenditure towards PGCIL charges has been claimed. Commission s View The Commission has verified the PGCIL bills submitted by AEGCL for FY 2014-15 and FY 2015-16, which tally with the expenses booked under the Audited Accounts. These Charges are payable to PGCIL as billed and are dependent on the POC mechanism, as specified by Central Electricity Regulatory Commission (CERC). The POC mechanism results in higher PGCIL Charges for the entire North Eastern Region AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 13
including Assam, and AEGCL has no control over the same. Hence, the Commission has approved the actual PGCIL Charges in the true-up for FY 2014-15 and FY 2015-16. The PGCIL Charges for FY 2016-17 have been estimated based on the actual PGCIL Charges billed in the first six months upto September 2016, and for FY 2017-18 and FY 2018-19, the PGCIL Charges have been approved based on the revised lower peak load projections submitted by AEGCL. Further, PGCIL Charges account for around 50% of AEGCL s ARR, whereas in most other States, the PGCIL Charges are billed directly to the DISCOM and are not included in the Transmission Licensee s ARR, unlike in the case of AEGCL. The Commission directs AEGCL and APDCL to work out the modalities to make APDCL rather than AEGCL the beneficiary of PGCIL, before the commencement of the next MYT Control Period, so that the PGCIL bills are raised to APDCL directly. Issue 2: Operation and Maintenance (O&M) Expenses Objection FINER submitted that AEGCL should submit the complete data regarding length of transmission lines, transformation capacity and substation bays to the Commission for determining the O&M costs for FY 2016-17 to FY 2018-19. FINER further added that AEGCL has very high contribution of Employee Expenses in the total ARR, however, it is not spending enough on R&M expenses. AEGCL should improve its operational performance with judicious expenditure on R&M and technology intervention to reduce employee costs. ABITA submitted that AEGCL has sought approval of O&M expenses for FY 2014-15 and FY 2015-16 on actual basis. The components of O&M expenses are mainly controllable in nature, therefore, O&M Expenses should not be approved at actuals. ABITA proposed allowance of O&M expenses of Rs.141.33 Crore and Rs.143.35 Crore against Rs.145.29 Crore and Rs.149.16 Crore for FY 2014-15 and FY 2015-16, respectively. ABITA added that AEGCL has considered employee expenses for FY 2016-17 based on actuals for H1 and estimated for H2 of FY 2016-17. Further, these expenses have been escalated by 10% and 12% to project employee expenses for FY 2017-18 and FY 2018-19, respectively. However, AEGCL has not provided any explanation for such high projection, i.e., 33% increase over actual employee expenses during FY 2015-16. AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 14
The huge increase in employee expenses is not justified in view of projected decrease in employee strength from 1978 Nos. in FY 2016-17 to 1703 Nos. in FY 2018-19. ABITA requested the Commission to approve employee expenses at an escalation rate of 7.2%, which is the average CPI increase of last three years, in line with the MYT Regulations, 2015. ABITA submitted that projection of A&G expenses and R&M expenses for the Control Period is not in line with AERC MYT Regulations, 2015. ABITA requested the Commission to approve A&G expenses and R&M Expenses at an annual escalation rate of 1.83%, i.e., equivalent to three-year increase in WPI on actual expenses of FY 2015-16. Response of AEGCL AEGCL submitted that it has 56 nos. of existing sub-stations with different level of Transformation capacities. Moreover, AEGCL operates 7.2 km of 400 kv, 1466 km of 220 kv, 2823 km of 132 kv, and 554 km of 66 kv Transmission Lines. AEGCL further submitted that the basis for projection of employee expenses is submitted in MYT Petition. R&M expenses have been projected based on past trends. AEGCL submitted that amounts proposed by ABITA may not be considered because the figures submitted by AEGCL in the True-Up Petitions are the actual expenses incurred by AEGCL in FY 2014-15 and FY 2015-16 as per Statutory and C&AG audited Annual Accounts, and these expenses are uncontrollable in nature. AEGCL submitted that key factors such as impact of Revision of Pay (ROP) 2016, promotion of employees, increase in DA, annual increments in basic pay, new recruitments, etc., have not been considered in ABITA s proposal. AEGCL has projected A&G and R&M Expenses for FY 2016-17 based on actual data for first six months (H1). The estimation for next six months (H2) for FY 2016-17 and projections for FY 2017-18 and FY 2018-19 are based on the estimated price escalation. Commission s View The MYT Regulations, 2015 specify the formula for allowing O&M expenses for Transmission Licensees for the MYT Control Period, The Commission has allowed the O&M expenses for the MYT Control Period in accordance with the MYT Regulations, 2015, as elaborated in Chapter 5 of this Order. AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 15
Issue 3: Return on Equity Objection FINER and ABITA submitted that the proposed Return on Equity for FY 2016-17 to FY 2018-19 is much higher as compared to that in FY 2015-16. FINER requested the Commission to approve Return on Equity in accordance with AERC MYT Regulations, 2015 after strict scrutiny. ABITA requested the Commission to approve the Return on Equity on equity base as approved by the Commission in the Business Plan Order. Response of AEGCL AEGCL submitted that it has computed Return on Equity as per Regulation 34 of AERC MYT Regulations, 2015 and additions of equity shown by AEGCL are as per the approved Business Plan. Commission s View As elaborated in Chapter 5 of this Order, AEGCL has considered the capital expenditure approved in the Business Plan Order rather than the approved capitalization, for computing the Return on Equity on the proposed equity addition during the Control Period. The Commission has considered equity addition with reference to the capitalization approved in this Order, and the Return on Equity has been approved accordingly. Issue 4: Bulk Supply Tariff (BST) Terminal Benefits Objection FINER submitted that approving 20 paise/kwh as Special Charge on Bulk Supply Tariff (BST) would lead to an escalation in the tariff. AEGCL should pursue the matter with the Government of Assam to ensure adequate funding to the Pension Trust Fund to avoid burden on consumers through additional tariff. ABITA submitted that energy sales as per MYT Petition of APDCL is increasing at a rate of 13-14%, however, the escalation rate used by AEGCL for projecting BST expenses is approximately 20%. ABITA requested the Commission to approve BST charges at 10% escalation rate on the actual BST expense for FY 2015-16. AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 16
Response of AEGCL AEGCL submitted that BST has been calculated as per Tariff Order dated November 21, 2014 @ 20 paise per unit on energy transmitted to APDCL. Commission s View The Commission has approved the BST @ 20 paise/kwh of energy injected into the APDCL grid by AEGCL, based on energy input approved for APDCL in APDCL s MYT Order, in accordance with the approach adopted in earlier Orders. Issue 5: Depreciation Objection FINER submitted that AEGCL has claimed depreciation on the entire Gross Fixed Assets (GFA) without deducting the depreciation on the grant component. FINER requested the Commission to disallow the depreciation on the grant component for the Control Period. Similar approach has been adopted in other States like Chhattisgarh, Delhi, Gujarat, Jammu & Kashmir. ABITA submitted that AEGCL has not provided the detailed calculation and methodology for depreciation claimed for FY 2014-15 and FY 2015-16. ABITA requested the Commission to use the methodology used in the past truing up Orders and disallow depreciation on assets created from grants. ABITA proposed depreciation of Rs.15.30 Crore and Rs.17.19 Crore for FY 2014-15 and FY 2015-16, respectively. ABITA added that the depreciation rates approved by the Commission as per AERC MYT Regulations, 2015 are substantially high and these depreciation rates should be applicable only on new assets added from FY 2016-17 onwards. For existing assets, ABITA requested the Commission to compute depreciation on Net Fixed Assets as on March 31, 2016 over 10 years. ABITA proposed depreciation of Rs. 24.13 Crore, Rs. 35.65 Crore and Rs. 32.84 Crore for each year of the Control Period, respectively. Response of AEGCL AEGCL submitted that it has calculated depreciation as per AERC Tariff Regulations, 2006 in the truing up Petitions for FY 2014-15 and FY 2015-16. AEGCL added that as per GoA (Power (Elect.) Mines & Minerals Department) Order No. PEL. 133/2003/pt/463 dated 03.03.2009, Grants & subsidies towards creation of capital assets paid by the GoA to ASEB and its successor Companies should be treated as AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 17
promoter s contribution, AEGCL is eligible to claim depreciation on assets created out of grants. Thus, views of ABITA may not be accepted. Commission s View This issue has been settled several times by the Commission and the Hon ble APTEL has also ruled that the Commission s decision to disallow depreciation on the assets funded out of grants is correct, and in accordance with the AERC Tariff Regulations, 2006. The Commission has accordingly disallowed depreciation on grant funded assets. Issue 6: Interest and Finance Charges Objection FINER submitted that AEGCL has proposed penal interest at the rate of 2.75% in the event of default in the repayment of instalments of principal or interest. However, AERC MYT Regulations, 2015 does not provide for allowance of penal interest. Being controllable cost, the penal interest proposed by AEGCL should not be allowed for truing up for FY 2014-15 and FY 2015-16 as well as for FY 2016-17 to FY 2018-19. ABITA proposed that interest and finance cost of Rs.15.73 Crore for FY 2014-15 and Rs.21.45 Crore for FY 2015-16 may only be approved. AEGCL requested the Commission to disallow penal interest and other borrowing cost as these costs are incurred due to inefficiencies of AEGCL. ABITA requested the Commission to disallow interest on GPF and repayment due in line with the approach adopted in past Orders. ABITA submitted that AEGCL has considered interest rate of approximately 7% for projecting the Interest expenses for the Control Period. The actual interest rate for FY 2014-15 and FY 2015-16, as worked out by ABITA, is approximately 3.8% and 4.5%, respectively. ABITA requested the Commission to approve interest of Rs. 25.11 Crore, Rs. 28.05 Crore and Rs. 28.07 Crore for each year of Control Period, respectively, by considering repayment equal to depreciation and interest rate of 4.5%. Response of AEGCL As regards FINER objection, AEGCL submitted that it has filed truing up Petitions for FY 2014-15 and FY 2015-16 as per Statutory as well as CA&G Audited Annual Accounts. AEGCL further clarified that it has not considered Penal Interest for FY 2016-17 to FY 2018-19. AEGCL Multi Year Tariff Order for Control Period from FY 2016-17 to FY 2018-19 Page 18